As someone with a Note 2, I'd rather Apple built two phones - the 4" and a larger model for those that want the larger one. If you want more storage, that should be handled with BTO options, not more shelf space.
The moral of the story is that not everyone has the same priorities when they get a phone. I love my Note 2's huge screen because it makes for a great device to read/play games/watch videos on. However, it is a bit large - and I have small hands! Using it one handed is nearly impossible except for tasks where I have sorta set things up for it.
The thing is, I don't particularly care about 1 handed phone use anyway. Maybe someone else does, and I can totally respect that just fine.
That's why there should be at least 2 size options! Even Apple does this with laptops!
Finally, I just wanted to add my favorite thing about the size: Using swiftkey 3 makes it incredibly easy to type on the note 2 while in portrait/vertical mode. My fingers are nowhere near fat, but it's just sooo comfortable/easy to use that way. Using the keyboard in landscape is a really terrible idea, though. XD